If you’re doing business in Dubai, it’s important that you have the appropriate licenses and permits in place. An important license to obtain is the Dubai industrial license. This license allows businesses to operate industrial-based activities within designated areas in Dubai. There are some important criteria to meet when applying for an industrial license in Dubai. However, there’s also a range of perks available to businesses that hold this license. Let’s discuss what an industrial license is, which businesses need it, and how to apply for one. Read on for everything you need to know regarding the industrial license in Dubai.
An industrial license in Dubai is a unique permit that allows industries to make and produce semi-manufactured or entirely manufactured products. This includes any products that need to be manufactured from raw materials, undergo processing, assembling and packaging.
Defining what falls under an industrial category can be difficult. Essentially, the term ‘production’ translates to the process of transforming raw materials or natural resources from their crude state to a final, usable state or product.
Accordingly, to apply for an industrial license, a business must have a physical presence in Dubai (i.e. – factory, manufacturing plant or warehouse). If you’re a business owner and want to apply for this license, you’ll need to register your company and submit an application to the Dubai Department of Economic Development (DED) and the Dubai Chamber of Commerce and Industry. The DED is ultimately in charge of issuing industrial licenses to business owners in Dubai.
The UAE government predicts tremendous growth within several sectors in the lead-up to 2030. Consequently, millions of highly qualified, experienced and talented expats from around the world move to Dubai, Abu Dhabi and other emirates annually.
Dubai is especially popular for its attractive tax regime, prime trading location and trend toward entrepreneurialism in recent years. Certain industries are, therefore, the beneficiaries of various incentive programs, funding and resources from the UAE government.
In the near future, some of the industries that can expect to receive added government support include:
- Aviation and aerospace
- Shipping, fishing and maritime industries
- Medical equipment industries
- Food, beverage and service sectors
- Industrial machinery and construction
Holding an industrial license is one way for Dubai businesses to ensure they take advantage of extra support and resources offered by the UAE government.
Any business that wants to carry out industrial activities within Dubai must have an industrial license. Businesses that need an industrial license must be located in one of the city’s designated industrial areas and operate in an industrial environment.
A business activity can be classed as industrial if it involves a process of production, accumulation, industrial segregation, and packaging of the end products. If you own a business that manufactures products in this way, you must hold a valid industrial license.
Knowing which business activities necessitate holding an industrial license in Dubai is important. As a local business, you’ll want to ensure you’re meeting your business obligations and complying with UAE government rules. Furthermore, there are benefits to obtaining this license, such as obtaining land subsidies and taking advantage of discounts on utilities for your business.
So, it pays to make sure your business is compliant in this regard. For help setting up your manufacturing business in Dubai, get in touch with one of our business setup consultants today.
Some industrial activity examples include:
- Processing raw materials
- Textile and fabric manufacturing
- Petroleum product manufacturing
- Metalwork and casting (e.g. tool making, iron and steelwork)
- Insulation and sealant manufacturing
- Paper and paper-based products
- Timber and furniture production
- Precious stone cutting
- Gold manufacturing
- Commercial food production (e.g. bread, fortified foods, bottled drinks, meat processing)
- Mixing and producing industrial chemicals
- Pharmaceutical product manufacturing
- Ceramics, chinaware, tableware and glass industry manufacturing
- The assemblage and manufacture of machines and related equipment
- Home appliances
- Plastic manufacturing
- Manufacture of motor vehicles, motorcycles and accessories
- Light aircraft fabrication & maintenance
- Battery production
- Filling, organising and packaging products
- Agricultural and farming equipment manufacturing
- Waste management and treatment
In line with the UAE government’s plan to bolster the economy and attract industry investments, additional benefits are afforded to businesses holding an industrial license.
The best part is, you as a business owner, your investors, the local market and your customer base can all benefit from your industrial license acquisition.
First off, the government provides land at a significantly subsidised rate, and in some cases for free if you’re an industrial license holder in Dubai. Furthermore, the lease terms of industrial spaces are often established in favour of the investor. Your business is also eligible for discounted utilities, such as electricity, gas and water.
Next, the UAE government endorses the development of innovative products by offering business loans at reduced rates. If your business has a new and unique offering which could serve to fortify the national economy, you’re eligible for extra funding during the research and development phases of your business.
Finally, the UAE government has resources and support in place for new and growing businesses in the industry sector. This means your company can receive industry-specific guidance and mentorship in order to improve your business and its operations.
If your business is in the manufacturing or industrial field, you will need a local industrial license. However, before you apply for this license, certain requirements must be fulfilled by your business.
Firstly, your industrial business must be fitted with fire safety equipment. Secondly, appropriate workplace health and safety rules must be outlined and adhered to by all staff and employees of the company. You are required to follow safety regulations and Labour Law rules closely when it pertains to your workers, as the holder of an industrial license.
Then, as the business owner, you’re responsible for maintaining the electrical safety of the premises. This means you must ensure the business is compliant with the standards determined by the relevant UAE authorities.
All of these procedures need to be documented and officially submitted to UAE authorities in the form of a detailed business plan. Lastly, once you meet these requirements, you can apply for an industrial license from the Department of Economic Development in your local emirate.
There are important prerequisites that investors must meet prior to applying for an industrial license in Dubai. These include:
- A physical business/warehouse must be established in Dubai
- There must be a minimum of 10 employees in the business
- Minimum capital investment requirements must be AED 250000
- 51% share goes to the local Emirati sponsor. The foreign investor holds the remaining 49% share
- Construction must commence within 6 months of the industrial license approval
- It’s a legal requirement that any raw imported materials for manufacturing are used for their intended purpose only
- All staff must be qualified and trained to operate the machinery in your business.
- In Abu Dhabi, at least 25% of all workers must be Emirati nationals.
Once the construction of your business is complete, you’ll have permission from the DED to begin work. It’s also important to remember that any changes to your business, including operational changes and Directorial appointments must be submitted in writing to the relevant DED authority in your emirate, as soon as they transpire.
To apply for an industrial license in Dubai, you’ll need to follow a few steps.
First, you’ll need to gain the relevant preliminary approvals from government departments before applying for your industrial license. Commonly, you’ll need to obtain approvals from the Ministry of Health, National Media Council, Ministry of Environment and Water and the Chamber of Commerce and Industry.
A crucial part of acquiring your industrial license is the development of a business plan. This comprehensive report should have a feasibility study that also outlines your business structure, industry activity, objectives, equipment required and operational details. Other details pertaining to your employees and their residency should also be included. A location proposal is ideal in your report. The business plan should also explicitly include the costs of manufacturing, capital investments, partnership contracts and financial information related to the business.
Other supporting documentation may include:
- Company registration documents
- Copies of passports of shareholders
- Residence visas of employees if applicable
- Emirati sponsorship information
- Notarised Memorandum of Association (MOA)
- Land lease agreement
Once this task has been accomplished, you can proceed with your license application. For this, you’ll need to gather your relevant documents, along with a completed application form and submit everything to the Dubai Department of Economic Development for approval.
When you’ve submitted your application form to the DED, along with supporting documents, and paid the required fees, the process is complete. Generally, the total processing time of the industrial license application is 3 months.
Provided all the requirements are met and documents are satisfactory, the final approval can be issued within 2 weeks. You’ll receive an official application approval notification from the Dubai Department of Economic Development. If your application is successful, you will receive a license with a validity of 1 year.
The total cost of an industrial license in Dubai is approximately AED 25000. There can be slight variations in this cost depending on whether your industrial business is set up in the UAE mainland versus in a free zone authority. Overall, setting up your business in a Dubai free zone will be more cost-effective.
As an industrial business owner, you have a few responsibilities that you must follow:
- As mentioned previously, once your license and work project is approved, construction of the industrial space must commence within 6 months.
- Your industry undertakings must be included in the Register of Industries. You can apply directly to the Register requesting formal recognition.
- If any changes or amendments are made to the data related to the business, you’re obligated to submit a letter detailing these updates to the DED. The company’s employee data must also be prepared and a copy submitted to the DED.
- It is essential that all directives for maintaining hygiene, health conditions and industrial safety are followed without exception.
- Business reports have to be submitted regularly to the UAE authorities and government departments.
- According to federal law, at least 25% of the workforce must be local Emiratis.
If you’re starting an industrial business in Dubai, it’s important to make sure that you have the necessary licenses in place. An industrial license in Dubai is an essential requirement for businesses that want to carry out industrial activities within the city. With this license, you’ll be able to operate your business legally and avoid any penalties.
Unlike setting up a small business, the licensing process of an industrial and manufacturing business is quite involved and complicated. It’s already a time-consuming process – finding a location, considering whether to set up a limited liability company, opening bank accounts, and ensuring your business is compliant with UAE and Dubai regulations.
If all of this planning gives you a headache, don’t worry, you’re not alone. Setting up a business can be overwhelming and stressful for many entrepreneurs in Dubai.
Luckily, we’re in your corner to help with every step of the process. At Virtuzone, we have experienced business setup consultants who can assist in many facets of business establishment, including how to apply for an industrial license In Dubai. We will take care of the paperwork, fine print and difficult tasks for you.
Contact us today for a free consultation. We look forward to helping you embark on your business journey!